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| | London Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | FTSE soars on outcome of Fed meeting The FTSE opened up 90 points this morning after the Federal Reserve surprised with its decision to maintain its bond-buying strategy on the back of softer growth.
Following its two-day policy meeting, the Fed announced it had decided to stick with its approach of buying $85bn of debt a month, but said it could still potentially scale back this sum by the end of the year.
In its report, the Fed said that while household spending and business fixed investment has advanced, and the housing sector has been strengthening, mortgage rates have risen further and fiscal policy is "restraining economic growth".
As such, as part of its goal "to foster maximum employment and price stability", it has "decided to await more evidence that progress will be sustained before adjusting the pace of its purchases".
The decision prompted 10-year gilts to drop 16 basis points to 2.833%, which is by no small change for a single day.
The gold price leapt on the news, prompting Randgold Resources to leap into the top spot on the FTSE.
Meanwhile, a UK report is due out today on retail sales is forecast to show a 3.2% year-on-year increase in August, up slightly from the previous month’s 3.1% jump.
In today's UK company news, regulatory price increases have allowed water and sewage group United Utilities to raise revenues and profits in the first half of the year. The FTSE 100 company said it anticipated underlying operating profits would be moderately higher than the first half of last year in the six months to the end of September due to tight control of costs.
African Barrick Gold has appointed a new Chief Financial Officer, Andrew Wray, who originally joined the company as Head of Corporate Development and Investor Relations in 2010. He will retain his existing responsibilities in addition to those of his new role. Jaco Maritz, who assumed the role of Acting Chief Financial Officer earlier this year, will revert to his original position of Vice President of Finance.
Food wholesaler Booker reported a strong set of interim results, as the warm summer weather boosted customer numbers, adding that the Makro turnaround is progressing well. Total sales in the 12 weeks to September 13th, including Makro, rose by 19.3% on the same period last year. Booker like-for-like (LFL) sales (excluding Makro) rose 3.5% with non-tobacco LFL sales climbing 6.9%.
Evraz has agreed to sell its subsidiary Evraz Vysokogorsky Iron Ore Mining and Processing Plant (VGOK) to NPRO URAL for $20m. The company has also agreed to provide of up to 400m Russian Rubles (RUB) to VGOK to normalise the working capital of the unit.
Gulf Keystone Petroleum narrowed its first half losses as the oil and gas company kept a tight rein on costs. Loss after tax came to $26.4m, compared to the previous year’s loss of $31.4m, reflecting a fall in administrative expenses to $19.3m from $34.1m. |
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- Full breakdown of dates, including grey-market period.
- Performance of peers and recent similar IPOs.
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| | UK Event Calendar | |
INTERIMS
Global Market Group Ltd (DI), Gulf Keystone Petroleum Ltd.(DI), IG Seismic Services GDR (Reg S), IQE, Mission Marketing Group, Networkers International, Premier Farnell
INTERIM DIVIDEND PAYMENT DATE
First Quantum Minerals Ltd.
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Balance of Payments (US) (13:30)
Bloomberg Consumer Confidence (US) (14:45)
Continuing Claims (US) (13:30)
Current Account (US) (13:30)
Existing Home Sales (US) (15:00)
Initial Jobless Claims (US) (13:30)
Leading Indicators (US) (15:00)
Philadelphia Fed Index (US) (15:00)
FINALS
Swallowfield, Wilmington Group
EGMS
Macau Property Opportunities Fund Ltd., Telekomunikacja Polska S.A GDR (Reg S)
AGMS
Accsys Technologies, Best of the Best, Diageo, Northgate, Picton Property Income Ltd, Puma High Income VCT
TRADING ANNOUNCEMENTS
ASOS, Booker Group, United Utilities Group
UK ECONOMIC ANNOUNCEMENTS
CBI Industrial Trends Surveys (11:00)
Internet Retail Sales (09:30)
Retail Sales (09:30)
FINAL DIVIDEND PAYMENT DATE
JPMorgan Brazil Inv Trust , Naibu Global International Company, red24
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe open: Stocks gain as Fed maintains QE - Fed keeps QE unchanged
- ECB addresses concerns on bank reviews
FTSE 100: 1.42%
DAX: 1.24%
CAC 40: 1.25%
FTSE MIB: 1.48%
IBEX 35: 1.39%
Stoxx 600: 1.21%
European stocks surged after the Federal Reserve surprised investors by keeping its monetary stimulus measures unchanged.
The central bank's Federal Open Market Committee (FOMC) decided to maintain its $85bn of monthly asset purchases, saying that mortgage rates have risen further and fiscal policy is "restraining economic growth".
In its report, the Fed said it decided to wait for more evidence of recovery before scaling back quantitative easing as part of its effort to foster employment and price stability.
"Accordingly, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40bn per month and longer-term Treasury securities at a pace of $45bn per month," the FOMC said following its two-day policy meeting.
"The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction."
Economists had expected the Fed to announce a tapering of between $10bn to $15bn per month.
ETX Capital Market Strategist Ishaq Siddqi predicts the Fed Chairman Ben Bernanke will announce a trimming its bond buying programme at the end of the year.
"Bernanke had his chance to fire the first round but held back," he said. "His reasons appear to be valid; there's going to be a big fiscal showdown in US Congress over the new budget to lift the debt ceiling. That said, Bernanke is on his way out with a new Fed president replacing him at the start of 2014.
"Given that market participants were prepared for tapering and that logically, it would have been sensible for Bernanke to start the taper ball rolling, I feel the Fed failed to seize on the opportunity to send the market a strong message by withdrawing its favourite drug."
"Risk sentiment may have got a nice kick up after the Fed meeting but the momentum behind this rally is certainly not credible, just like the Fed's reputation at the moment."
ECB fears bank stress tests will deter investors
The European Central Bank is worried investors might be put off by its reviews of banks next year when it takes over supervision of all euro-area lenders, if not timed well.
The ECB will conduct a risk review, analyse banks' balance sheets and implement stress tests in collaboration with the London-based European Banking Authority.
The central bank is trying to avoid releasing conflicting numbers at different times, particularly for banks that are financially unstable, at risk of deterring investors.
ECB Executive Board member Peter Praet and Governing Council member Ewald Nowotny said two companies must avoid giving different estimates of how much extra capital banks will need to raise.
"Probably the stress test has to be integrated in the balance-sheet assessment, because you don't want to come with one figure per bank, with the possibility of a recap, and then come later on with the stress test," Praet said in London this week.
Miners rally as gold extends gains
Randgold Resources and Fresnillo advanced as the price of gold rose on Wednesday.
ThyssenKrupp gained after Steinbrueck, who leads the opposition party Social Democrats, said it was "imperative" to prevent a break-up of the German steelmaker.
Cie. Financiere Richemont, which owns the Cartier brand, rallied after a report showed watch exports rose 0.5% in August from a year earlier. |
| | This major London estate agent is listing on the LSE. | | Your free report on the Foxtons IPO includes: - IPO parameters (price range/market cap etc)
- Full breakdown of dates, including grey-market period.
- Performance of peers and recent similar IPOs.
Click here for your free Foxtons IPO report Losses can exceed deposits. |
| | US Market Report | | US close: Stocks leap on surprise Fed decision US stock markets closed significantly higher on Wednesday after the Fed surprised with its decision to maintain its bond-buying strategy on the back of softer growth.
Following its two-day Committee meeting, the Fed announced it had decided to stick with its approach of buying $85bn of debt a month, but said it could still potentially scale this sum back by the end of the year.
In its report, the Fed said that while household spending and business fixed investment has advanced, and the housing sector has been strengthening, mortgage rates have risen further and fiscal policy is "restraining economic growth".
As such, as part of its goal "to foster maximum employment and price stability", it has "decided to await more evidence that progress will be sustained before adjusting the pace of its purchases".
The statement continued: "Accordingly, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40bn per month and longer-term Treasury securities at a pace of $45bn per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction."
The Fed believes this strategy should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative. The expectation is that this in turn should "promote a stronger economic recovery and help to ensure that inflation, over time, is at the rate most consistent with the Committee's dual mandate".
Chairman Ben Bernanke also added that the Fed currently has no plans to increase short-term interest rates.
The news prompted the S&P 500 to rise to a record intraday high of 1,729.44, while the Dow Jones hit its own intraday record of 15,709.58, and ended up at a record 15,676.94.
In other news, J.P Morgan Chase is reportedly set to face a fine in excess of $900m in relation to last year's trading debacle. The fine would be imposed by the Financial Conduct Authority, the Securities and Exchange Commission, Office of the Comptroller of the Currency, and the Federal Reserve.
Oracle shares took a hit after the company said it expects second quarter revenue growth of between -1% and +2%, compared to expectations of +3%.
Other Markets
Crude oil ended the session up 0.31% at $108.41 a barrel, while gold closed up 4.19% at $1,307.60.
Investors embarked on a dollar sell-off following the surprise Fed decision, taking the dollar index, which measures the US dollar against a basket of six rivals, to 80.081, its lowest level in seven months. On Tuesday the index traded at 81.167.
S&P 500 - Risers
Adobe Systems Inc. (ADBE) $52.58 +9.22%
Newmont Mining Corp. (NEM) $30.87 +8.24%
D. R. Horton Inc. (DHI) $21.33 +6.92%
Lennar Corp. Class A (LEN) $37.33 +6.54%
Aon plc (AON) $73.95 +5.63%
PulteGroup Inc. (PHM) $17.93 +5.47%
HCP Inc. (HCP) $43.95 +5.24%
Salesforce.Com Inc. (CRM) $52.49 +5.19%
FedEx Corp. (FDX) $116.25 +5.03%
Boston Properties Inc. (BXP) $110.89 +4.91%
S&P 500 - Fallers
Charles Schwab Corp. (SCHW) $21.36 -5.65%
Express Scripts Holding Co (ESRX) $62.89 -4.64%
WellPoint Inc. (WLP) $84.39 -4.40%
Sears Holdings Corp. (SHLD) $59.62 -3.89%
CIGNA Corp. (CI) $81.25 -2.95%
E*TRADE Financial Corp. (ETFC) $16.98 -2.86%
Electronic Arts Inc. (EA) $26.86 -2.68%
Humana Inc. (HUM) $96.95 -2.66%
MetLife Inc. (MET) $48.63 -2.51%
Lincoln National Corp. (LNC) $43.82 -2.47%
Dow Jones I.A - Risers
Alcoa Inc. (AA) $8.56 +3.57%
Home Depot Inc. (HD) $77.37 +2.07%
Coca-Cola Co. (KO) $39.59 +2.06%
Cisco Systems Inc. (CSCO) $24.80 +1.74%
Wal-Mart Stores Inc. (WMT) $76.42 +1.69%
General Electric Co. (GE) $24.86 +1.68%
Pfizer Inc. (PFE) $29.04 +1.40%
E.I. du Pont de Nemours and Co. (DD) $60.44 +1.38%
Travelers Company Inc. (TRV) $85.91 +1.23%
Chevron Corp. (CVX) $125.82 +1.19%
Dow Jones I.A - Fallers
Unitedhealth Group Inc. (UNH) $73.04 -1.71%
Nasdaq 100 - Risers
Adobe Systems Inc. (ADBE) $52.58 +9.22%
Randgold Resources Ltd. Ads (GOLD) $79.19 +7.60%
Regeneron Pharmaceuticals Inc. (REGN) $309.17 +4.23%
Dollar Tree Inc (DLTR) $57.82 +3.56%
Autodesk Inc. (ADSK) $40.62 +3.33%
Cognizant Technology Solutions Corp. (CTSH) $83.59 +3.07%
Expeditors International Of Washington Inc. (EXPD) $45.23 +3.05%
Biogen Idec Inc. (BIIB) $246.35 +2.62%
Amazon.Com Inc. (AMZN) $312.03 +2.59%
Priceline.Com Inc. (PCLN) $995.09 +2.56%
Nasdaq 100 - Fallers
Catamaran Corp (CTRX) $50.82 -8.20%
Express Scripts Holding Co (ESRX) $62.89 -4.64%
Sears Holdings Corp. (SHLD) $59.62 -3.89%
Western Digital Corp. (WDC) $64.28 -1.24%
Vertex Pharmaceuticals Inc. (VRTX) $77.11 -1.18%
Check Point Software Technologies Ltd. (CHKP) $58.05 -0.84%
Xilinx Inc. (XLNX) $47.69 -0.64%
Henry Schein Inc. (HSIC) $105.20 -0.41%
Comcast Corp. (CMCSA) $44.27 -0.40%
Intuitive Surgical Inc. (ISRG) $372.50 -0.39% |
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| | Newspaper Round Up | | Thursday newspaper round-up: Fed, Housing bubble, Scotland The Fed cut its growth forecast and confounded expectations that it would start to slow its third round of quantitative easing as the rate-setting Federal Open Market Committee said it would "await more evidence that progress will be sustained before adjusting the pace of its purchases". The decision suggests the Fed was alarmed by the sharp rise in long-term interest rates that followed its June announcement of a likely scenario for tapering its QE3 programme and wanted to push back against markets, and by the prospect of a big fiscal showdown in the US Congress in the coming weeks, the Financial Times writes.
Europe tabled a web of regulations yesterday to fight benchmark rigging on the financial and commodities markets, though the Brussels scheme will leave oversight mainly in national hands. For the first time, indices such as Libor and North Sea Brent crude will be regulated, ending decades of self-management by industry bodies. Michel Barnier, the Single Market Commissioner, said that his plan was an international antidote to abuse of the benchmarks, The Times reports.
George Osborne on Wednesday insisted he was not inflating a housing bubble, despite official data showing property prices in England have broken through their pre-crisis peak. The chancellor told an audience at the Institute of Directors annual conference that there was no housing boom under way even though the ONS data showed the average price of a UK house has now surpassed its peak of five years ago with the average price reaching £245,000. Osborne said he was "alert to the risks but let's not pretend there's a housing boom," according to The Guardian.
The Co-operative Group has removed a key obstacle to pulling the plug on its stricken bank, but has risked raising the hackles of its bondholders. The mutual said yesterday that it would repay early a tranche of bonds linked to bonds in its bank. This link means that if the Co-op put the bank into run-off — triggering a default of its bank bonds — a default of group bonds would automatically follow, The Times says.
Alex Salmond was hit by a double blow in the polls yesterday as he led a debate marking a year until Scotland's historic referendum. One survey showed no increase in support for independence over the last four months and another showed a huge majority of young people supporting the Union. A new Ipsos Mori poll reveals that, among those certain to vote, 31% would say Yes to independence next year, compared with 59% who plan to vote No, The Scotsman reports.
Royal Bank of Scotland is in the final stages of deciding on a buyer for 315 of its branches and may tell the victor today. RBS executives are thought to be meeting today to make a final decision between a consortium including Corsair Capital, to which Lord Davies of Abersoch, the former Trade Minister, is a senior adviser, and America's Centerbridge Partners, and a separate private equity tie-up of Blackstone and AnaCap, writes The Times. | | |
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